Eastwick Produces and Sells Three Products -
Fixed Costs Total $200,000

question 36

Multiple Choice

Eastwick produces and sells three products. Last month's results are as follows:
$\begin{array}{llr} &\text { P1 } &\text { P2 } &\text { P3 } \\ \text { Revenues } &\$100,000&\$200,000&\$200,000\\ \text {Variable costs } &40,000&140,000&80,000\end{array}$

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Fixed costs total $200,000. What sales volume would generate an operating profit of $150,000? (Assume the current product mix.)

• A) $650,000.
• B) $610,000.
• C) $729,167.
• D) $850,000.

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Definitions:

Manufacturing Overhead

All indirect costs associated with the manufacturing process, such as utilities, rent, and salaries for employees not directly involved in production.

Required Production

This refers to the number of units that must be produced in a given period to meet sales demands and inventory policies.

Cash Budget

An estimation of the cash inflows and outflows for a business or individual for a specific period, highlighting the anticipated cash position.

Cash Receipts

The money a company receives from its various business activities, typically including sales, services, loans, or any transactions that bring cash into the organization.